<ul><li>SEBI is considering extending the use of an expected loss-based rating framework for municipal bonds to provide a more comprehensive risk assessment.</li><li>The proposal suggests using this framework alongside the existing standardised rating scale for credit rating agencies.</li><li>Expected loss-based ratings are primarily used for infrastructure-related instruments and could improve transparency for investors in municipal bonds.</li><li>The expected loss-based rating system combines the probability of default with the potential loss if a default occurs, providing a clearer picture of recovery prospects in case of financial distress.</li></ul>

SEBI Considering New Rating Framework For Municipal Bonds To Enhance Risk Assessment

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